Vale says rail delay limits new iron mine output to 75 mln tns

RIO DE JANEIRO, Sept 19 (Reuters) - Brazil's Vale SA
said on Monday output from its new S11D iron ore mine
in the Amazon region will be limited to 83 percent of full
capacity as efforts to preserve cash and limit transport
disruptions crimp a needed railway expansion.

The $14.3 billion project, Vale's biggest-ever investment,
was widely expected to produce up to 90 million metric tonnes a
year of iron ore - the key ingredient in steelmaking - after a
two-year ramp-up scheduled to begin by year-end.

But S11D will only deliver up to 75 million metric tonnes to
international seaborne clients after a four-year ramp-up, Vale
said, responding to an article last week in Britain's Financial
Times business newspaper.

"There has been a replanning of the execution of
construction work on the logistics corridor in a phased form in
order to minimize interference with existing operations and
optimize our cash flow without increasing the project's capital
spending," Vale said.

Vale, struggling with slumping iron ore prices
.IO62-CNI=SI which have slid nearly 60 percent in three years
as well as delays completing S11D, has been slashing
expenditures and selling assets.

S11D is expected to help Vale cut its per-tonne ore costs
while helping drive higher-cost competitors from the market as
demand falls.

Despite limits on the amount of S11D can ship to clients,
Vale said there will be no change to the mine's official
capacity of 90 million tonnes.

The S11D mine, also known as Serra Sul, is one of two giant
iron-ore mines in Vale's sprawling Carajas resource complex in
Brazil's northern state of Para. The other mine, Serra Norte, is
producing 155 million tonnes a year.
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